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Markets yawn at reports of Lew at Treasury

Investors' long-term suspicion that White House chief of staff Jack Lew would be named the next Treasury Secretary is proving accurate. The announcement of Lew to the post, expected by the end of the week

Wall Street's long-held suspicion that White House chief of staff Jack Lew would be named the next Treasury Secretary appears to be proving accurate.

Lew would succeed Timothy Geithner, who has announced he wants to leave the Treasury Department in mid-January.

The announcement that President Obama will nominate Lew to the post is expected by the end of the week, according the Associated Press. That would confirm what many analysts and investors have been anticipating for months.

Stocks rallied Wednesday, not because of the impending Treasury secretary announcement, but because of optimism that corporate profits might have a shot at meeting, or possibility topping, Wall Street estimates. Alcoa kicked off the fourth-quarter earnings season reporting better-than-expected revenue. Alcoa rose 0.5% to $9.15 while the Dow Jones industrial average was up nearly 60 points to 13,388.38.

The fact that Lew's appointment has been so widely anticipated is one reason the market isn't reacting to the news, says Pierre Ellis, senior economist at Decision Economics. "The market has looked at (Lew) for awhile now," he says. "This just confirms what was more and more apparent."

Market reaction is also muted to the expected appointment because Lew is somewhat of a "mixed benefit," Ellis says. Given that balancing the budget is one of the top jobs of government now, Lew's experience in the Office of Management and Budget in the Clinton Administration gives him credibility in that role. Having Lew in the post "will be very advantageous with budget negotiations. He really knows that subject," Ellis says.

At the same time, though, investors are under the impression that historically Treasury secretaries have been more successful when they have more direct financial knowledge than Lew does, Ellis says. "The markets think we do better with a financial professional in the job," he says.

And the perception of Lew as a strong Democrat sets up the potential for more political bickering, says Michael Farr, of Farr Miller & Washington.

Some investors might worry Lew could have more trouble "reaching across the aisle" and finding ways to get Republicans and Democrats to coordinate, Farr says. "Having worked for (former House Speaker) Tip O'Neil and the Clinton White House, he's a well-defined Democrat, which means the well-defined Republicans are going to object out of hand," Farr says.

Given the mixed nature of the appointment and the fact it was so widely anticipated, though, Farr says investors aren't focused on it at all. "The markets aren't focused on it (the appointment) yet," he says.